Back to GetFilings.com
1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-19914
COTT CORPORATION
(Exact name of registrant as specified in its charter)
CANADA NONE
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
207 QUEEN'S QUAY WEST, SUITE 340
TORONTO, ONTARIO M5J 1A7
(Address of principal executive offices) (Zip Code)
------------------------
Registrant's telephone number, including area code: (416) 203-3898
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Shares without nominal or par value...... The Toronto Stock Exchange
The Nasdaq Stock Market, Inc.
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K 13 is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III in this form 10-K or any
amendment to this form 10-K. [ ]
The aggregate market value of the common equity held by non-affiliates of
the registrant as of March 12, 2001, (based on the closing sale price of the
registrant's common stock as reported on the NASDAQ on such date) was
$352,946,874.
The number of shares outstanding of the registrant's common stock as of
March 12, 2001 was 59,955,442.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS
PAGE
----
PART I
Item 1 Business.................................................... 4
Item 2 Properties.................................................. 9
Item 3 Legal Proceedings........................................... 10
Item 4 Submission of Matters to a Vote of Security Holders......... 11
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 12
Item 6 Selected Financial Data..................................... 13
Item 7 Management's Discussion and Analysis of Financial Condition
and Results................................................. 13
Item 7A Quantitative and Qualitative Disclosures About Market
Risk........................................................ 13
Item 8 Financial Statements and Supplementary Data................. 13
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial............................................... 13
PART III
Item 10 Directors and Executive Officers of the Registrant.......... 14
Item 11 Executive Compensation...................................... 15
Item 12 Security Ownership of Certain Beneficial Owners and
Management.................................................. 15
Item 13 Certain Relationships and Related Transactions.............. 15
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 16
2
3
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
safe harbor for forward-looking statements made by or on behalf of the Company.
The Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in this report and
other of the Company's filings with the Securities and Exchange Commission and
the Company's reports to shareowners. Generally, the words "believe," "expect,"
"intend," "estimate," "anticipate," "will" and similar expressions identify
forward-looking statements. All statements which address operating performance,
events or developments that the Company expects or anticipates will occur in the
future -- including statements relating to operations, economic performance,
financial condition and achievements of the Company, statements relating to
objectives, business plans or strategies, and projected or anticipated benefits
or other consequences of such plans or strategies, statements expressing general
optimism about future operating results or of the performance of management --
are forward-looking statements within the meaning of the Act. The
forward-looking statements are and will be based on management's views and
assumptions, at the times such statements are made, regarding future events and
operating performance, and speak only as of such times. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
The following are some of the factors that could affect the Company's
financial performance (including but not limited to sales, earnings and cash
flow) or could cause actual results to differ materially from estimates
contained in or underlying the Company's forward-looking statements:
- Increased competitor consolidations, market place competition,
particularly among branded beverage products, and competitive product
and pricing pressures could impact the Company's earnings, market share
and volume growth.
- Changes in laws and regulations, including changes in accounting
standards, taxation requirements (including tax rate changes, new tax
laws and revised tax law interpretations) and environmental laws in
domestic or foreign jurisdictions.
- Fluctuations in the cost and availability of raw materials and
ingredients and the ability to maintain favorable supplier arrangements
and relationships.
- Interest rate fluctuations and other capital market conditions,
including foreign currency rate fluctuations, which are subject to
various factors, including the impact of changes in worldwide and
national economies, foreign currency movements, pricing fluctuations for
the Company's products and changes in interest rates.
- Retailers' continued commitment to their retailer brand beverage
programs.
- Changes in consumer tastes and preference and market demand for new and
existing products.
- The Company's ability to integrate acquired businesses into its
operations.
- The uncertainties of litigation, as well as other risks and
uncertainties detailed from time to time in the Company's other public
filings.
- Changes in general economic and business conditions.
- The effectiveness and success of the Company's spending programs and
acquisition investments.
- Adverse weather conditions, which could reduce demand for the Company's
products.
The foregoing list of important factors is not exclusive or exhaustive.
Many of these factors are beyond the Company's ability to control or predict.
The Company cautions investors not to place undue reliance on forward-looking
statements.
3
4
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Annual Report to Shareowners for the year ended
December 30, 2000, (the "Company's 2000 Annual Report to Shareowners") are
incorporated by reference in Part I, II and IV.
Portions of the Company's Proxy Circular for the Annual and Special Meeting
of Shareowners to be held on April 18, 2001 are incorporated by reference in
Part III.
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE BUSINESS(1)
The Company was incorporated under the laws of Canada on July 25, 1955 under the
name Cott Beverages (Canada) Ltd., and amalgamated with Stewart Bottling Company
(Limited) on February 1, 1966. On May 22, 1969, the name was changed to Cott
Beverages Ltd., and on June 7, 1991 the name was changed to Cott Corporation. On
January 3, 1999, the Company amalgamated with Atlantic Beverages Ltd., Cott
Beverages Inc., Cott Beverages West Ltd., Bessey Juices Inc. and 3566170 Canada
Limited (each such entity being, directly or indirectly, wholly-owned by the
Company), and continued as Cott Corporation. On January 2, 2000, the Company
amalgamated with 3699455 Canada Inc., a wholly-owned subsidiary of the Company,
and continued as Cott Corporation. The Company's common shares ("Common Shares")
were split on three occasions during the 1990's: three for one (on December 18,
1991); two for one (on July 29, 1992); and two for one (on July 30, 1993).
The Company's governing statute is the Canada Business Corporations Act and
its registered office is located at 333 Avro Avenue, Pointe-Claire, Quebec,
Canada H9R 5W3. The Company's executive office is located at 207 Queen's Quay
West, Suite 340, Toronto, Ontario, Canada M5J 1A7.
The Company is a leading supplier of premium quality retailer brand
carbonated soft drinks ("CSD"). The Company's product line also includes clear,
sparkling flavored beverages, juices and juice-based products, bottled water,
organic and high energy beverages and iced teas. The Company's products are
principally sold under customer controlled private labels, but also under the
Company's own control brands and licensed brand names. The Company operates its
United States business through its indirect, wholly-owned significant subsidiary
BCB USA Corp.; its Canadian business through its Cott Beverages Canada division;
and its United Kingdom business through its wholly-owned significant subsidiary
Cott Beverages Ltd.
NARRATIVE DESCRIPTION OF THE BUSINESS
Since 1998, the Company has taken several steps to strengthen its
management team and strategic focus. The Company's management team identified
and addressed challenges during this transitional period and initiated a
turnaround based on a three pronged strategy to focus on core (CSD business in
core geographic markets of U.S., Canada and U.K.), fix the cost structure and
strengthen the business. For 2001, the Company is pursuing "growth" by building
on the turnaround, broadening its strategy to: (i) continue to focus on core;
(ii) drive margins and cash flow; and (iii) strengthen and grow the business.
Approximately 75% of the Company's United States beverages are produced in
facilities that are either owned or leased by the Company or by a third party
manufacturer with whom the Company has a long-term packing agreement. The
Company manufactures virtually all of its Canadian and United Kingdom beverages
in
- ---------------
(1) Unless otherwise indicated, all references to cases are to eight ounce
equivalent cases and all references to currency are in United States
dollars. References to "1996" apply to the fiscal year ended January 25,
1997. References to "1997" apply to the fiscal year ended January 31, 1998.
In October 1998, the Company decided to report its financial results on a
calendar year basis, which resulted in an 11-month fiscal period that ended
on January 2, 1999, which is referred to as "1998". References to "1999"
apply to the fiscal year that ended January 1, 2000. References to "2000"
apply to the fiscal year that ended December 30, 2000. Unless the context
otherwise indicates, references to the "Company" mean Cott Corporation
together with all of its subsidiaries.
4
5
facilities that are either owned or leased by the Company. The Company relies on
third parties to produce and distribute products in areas or markets where the
Company does not have its own production facilities, such as continental Europe,
or when it requires additional production capacity.
Since 1995, a series of acquisitions and other activities have expanded and
strengthened the Company's production and distribution capabilities in its core
geographic markets:
- the acquisition (in November 1996) of the private label CSD and spring
water businesses of Brio Beverages Inc., including a beverage
manufacturing plant and equipment in Surrey, British Columbia, Canada;
- the acquisition (in January 1997) of the rights to the private label CSD
business of Premium Beverage Packers, Inc. ("Premium"). The Company
currently has a long-term packing agreement with Premium, through which
the Company has secured approximately 75% of Premium's CSD production
capacity at its plant in Wyommissing, Pennsylvania;
- the acquisition (in March 1997) of the shares of Texas Beverage Packers,
Inc., a CSD manufacturer with a plant located in San Antonio, Texas;
- the construction of two new beverage production facilities, one in
Wilson, North Carolina and one in Tampa, Florida, which have been fully
operational since June 1997 and August 1997, respectively;
- the acquisition (in the fall of 1997) of 100% of the outstanding share
capital of Hero Drinks Group (UK) Limited ("Hero"), through which the
Company acquired Hero's state of the art manufacturing facilities,
including Hero's established customer base; and,
- the acquisition (in the fall of 2000) of the Honickman Group's retailer
brand beverage business through which the Company acquired a CSD
manufacturing facility in Concordville, Pennsylvania, an established
customer base and rights to the Vintage(TM) brand of seltzer water.
These acquisitions have transformed the Company from one that was dependent
on third party manufacturing for much of its production to one that today
produces over 80% of its beverages in facilities that are owned or leased by the
Company or by a third party, with whom the Company has a long-term packing
agreement.
The Company's strategy to focus on its core business led to the decision to
divest the following non-strategic operations:
- the Company's Australian beverage operations, which were sold in April
1999;
- the Company's frozen food business, which was sold in May 1999;
- the Company's packaging design business, which was sold in May 1999
(subject to an agreement by which the new owners committed to provide
ongoing creative services to the Company at competitive rates over a
ten-year period, of which approximately eight years remain);
- the Company's Featherstone CSD manufacturing plant and related business
in the United Kingdom, which were sold in May 1999;
- a substantial portion of the Company's minority interest in Menu Foods
Limited (a pet food manufacturer), which was sold in August 1999 with
the Company retaining a 7.6% interest;
- the Company's polyethylene terephthalate ("PET") preform manufacturing
plant in Leland, North Carolina and the PET bottle blowing equipment in
three of the Company's CSD manufacturing plants in the United States,
which were sold to Schmalbach-Lubeca Plastic Containers USA, Inc.
("Schmalbach") in April 2000. In conjunction with this sale, the Company
entered into a long-term supply agreement with Schmalbach for the supply
of PET bottles in the United States; and,
- Company's United Kingdom PET preform manufacturing business, which was
sold in October 2000.
In prior years, the Company disposed of its bottling operations in Norway
and South Africa, its beer and snack food businesses, and its joint-venture
interest in the "Virgin" soft drink business.
5
6
Recognizing the need for sustained long-term growth combined with increased
efficiency, the Company began a restructuring of its worldwide operations in the
fall of 1998 to centralize organizations in its three core markets. In January
1999, in order to simplify the corporate structure, the Company completed a
reorganization involving various of its Canadian and United States operating
subsidiaries. As a result, in part, of that reorganization, the Company now
operates its Canadian business through its Cott Beverages Canada division. Also
in January 1999, the Company's principal United States beverage operating
company, Cott Beverages USA, Inc., merged with its subsidiaries (continuing as
Cott Beverages USA, Inc.), and in January, 2000 that entity changed its name to
BCB USA Corp. The Company now operates its United States business as "Cott
Beverages USA, a division of BCB USA Corp".
In addition to changes in the Company's management and strategic focus, in
July of 1998 the Company's shareowner composition underwent a significant
transition. Along with various members of the Pencer family, the Company
completed a transaction involving Thomas H. Lee Company ("Lee") and various
parties related to or affiliated with Lee (collectively, "THL") in which THL
purchased an aggregate of:
- 10,000,000 Common Shares from members of the Pencer family, together
with an option (the "Option") to purchase an additional 5,000,000 Common
Shares from such members; and
- 4,000,000 Convertible Participating Voting Second Preferred Shares,
Series 1 ("Preferred Shares"), from the Company, which Preferred Shares
are entitled to voting rights together with the Common Shares on an as
converted basis.
As a result of the transaction, assuming conversion of the Preferred Shares
and the exercise of the Option, THL owns approximately 34% of the Company's
outstanding Common Shares on a fully diluted basis.
Additionally, in November 1999, THL was granted the right to purchase up to
an additional 5% of the Company's outstanding voting shares on the open market,
which upon completion would bring its percentage holding of the Company's
outstanding voting shares to no more than 35%, calculated on a fully diluted
basis. As of March 12, 2001, and based upon the Company's review of public
disclosure documents, Lee has not purchased any additional shares. As
consideration for the grant of this right, pursuant to the November agreement,
THL has, on its own behalf and on behalf of THL, granted to the Company's
Chairman of the Board a proxy to vote that number of voting shares of the
Company to ensure that at no time will THL have voting rights in respect of more
than 35% of the outstanding voting shares of the Company, calculated on a fully
diluted basis. Lee, on its own behalf and on behalf of THL, has also agreed not
to exercise any options to acquire additional Common Shares of the Company if,
after giving effect to such exercise, THL would have the power to vote or hold
more than 35% of the outstanding voting shares of the Company, calculated on a
fully diluted basis.
FINANCIAL INFORMATION ABOUT SEGMENTS
For financial information about segments see note 26 to our consolidated
financial statements, found on pages 44 and 45 of the Company's 2000 Annual
Report to Shareowners, which is incorporated herein by reference.
MARKET FOR SECURITIES
The Company's Common Shares are listed on The Toronto Stock Exchange and
are quoted through The Nasdaq Stock Market, Inc. ("NASDAQ") national market.
PRINCIPAL PRODUCTS AND PRINCIPAL MARKETS
The Company's principal markets are in the United States, Canada and the
United Kingdom. While the majority of the Company's products are produced as
private label for retail customers, the Company also sells proprietary products
that include its own and licensed brands.
In 2000, sales of beverages represented 100% of the Company's total sales
revenues, as compared to 99.7% in 1999 and 99.2% in 1998. The Company's sales of
beverages in the United States totaled $657.3 million for 2000; $596.8 million
for 1999; and $513.1 million for 1998. Sales of beverages in Canada totaled
$169.7 million
6
7
for 2000; $172.1 million for 1999; and $164.5 million for 1998. Sales of
beverages in the United Kingdom & Europe totaled $156.7 million for 2000; $201.9
million for 1999; and $239.4 million for 1998. The total sales revenue
attributable to all countries, excluding Canada, totaled $820.9 million for
2000; $818.8 million for 1999; and $790.5 million for 1998. The Company believes
that the opportunity exists to increase sales of beverages in various markets
by: leveraging existing customer relationships; obtaining new customers,
exploring new channels of distribution; and increasing the Company's presence in
the alternative beverage segment.
The Company distributes its beverages in a variety of ways. Sales in the
United States and Canada are either: (i) picked up by customers at the Company's
facilities; (ii) distributed to store locations using third party distributors;
or (iii) delivered by the Company or a common carrier to either the customer's
distribution centers or directly to retail locations. In the United Kingdom,
product is delivered to the customer's distribution centers or directly to
stores, utilizing third-party carriers, although a few customers collect product
directly from the point of manufacture.
NEW PRODUCTS
The Company introduced several new products during 2000 including: (i) in
the United States, purified drinking water with added minerals and new CSD's
such as: sparkling lemonade, sparkling cranberry and sparkling pink grapefruit;
(ii) in Canada, a sparkling cranberry and sparkling lemonade CSD; and (iii) in
the United Kingdom, organic fruit flavoured juices, dilute to taste and high
energy adult drinks.
RAW MATERIALS
In January 1994, the Company entered into a long-term worldwide concentrate
supply contract (the "RC Agreement") with Royal Crown Company Inc. ("RCC"). The
RC Agreement is for a term of 21 years from January, 1994, with perpetual 6 year
extensions thereafter, unless either party elects not to renew. The RC Agreement
provides that RCC will supply private label concentrates exclusively to the
Company and that the Company will purchase all of its requirements for cola
concentrates and at least 75% of its total requirements for cola and non-cola
concentrates from RCC, for use by the Company in its private label and
proprietary label CSD. Upon termination of the RC Agreement because one party
has elected not to renew (the "electing party"), formulae developed by the
non-electing party, formulae developed by the electing party which are in use at
the time and formulae developed by both parties jointly shall belong to the
non-electing party. Upon termination of the RC Agreement as a result of a breach
or failure to perform by one party, formulae developed by the non-breaching
party, formulae developed by the breaching party which are in use at the time
and formulae developed by both parties jointly shall belong to the non-breaching
party.
In addition to concentrates, the principal raw materials required for the
Company's manufacturing operations are PET bottles, cans, lids, sweeteners,
labels, cartons and trays, bottle caps and carbon dioxide. The Company has a
variety of suppliers for many of its materials, and has had long standing
relationships with many of the Company's raw material suppliers. The Company
typically enters into annual supply arrangements with its suppliers and the
Company does not have long-term contracts with most of them. However, the
Company has long-term agreements with suppliers of certain key raw materials,
such as cans, lids, artificial sweeteners, and PET bottles. Replacing these key
raw material suppliers may result in increases or decreases to the Company's raw
material costs. With the exception of the unique formulations provided by RCC,
the Company believes that alternate raw material supplies are readily available
in the event it is unable to source materials from any of its suppliers.
The majority of the Company's raw materials are purchased subject to
agreements that allow for adjustments in prices that reflect the Company's
suppliers' raw material cost changes. The remaining raw materials are subject to
fixed prices for terms of one to three years, after which the Company typically
negotiates new terms based upon prevailing market conditions. Should the
Company's cost of raw materials increase, there is no assurance that the Company
can adjust prices to all of its customers to reflect such increases, nor can
there be assurance that such adjustments will take effect at the same time as
the Company's raw material costs increase.
7
8
Although none of the raw materials used by the Company is in short supply,
the supply of specific raw materials may be adversely affected by a number of
factors, including: the Company's suppliers' access to materials; energy
shortages; governmental controls; labor disputes; and weather conditions.
TRADE SECRETS, TRADEMARKS AND LICENSES
The bulk of the Company's sales of beverages is to private label customers
who own the trademarks associated with those products. The Company is the
registered owner of various trademarks, most notably Cott(TM) in Canada. The
Company is licensed to use certain trademarks, including: Chubby(TM) in Canada
and RC(TM) in certain regions of Canada; and Benshaws(TM) and Carters(TM) in the
United Kingdom. The Company sells beverages under its own Stars & Stripes(TM),
Vess(TM) and Vintage(TM) marks in the United States and Fruitfull(TM), Edge(TM)
and Red Rooster(TM) marks in the United Kingdom. In the United States, an
application to register the Stars & Stripes trademark is pending and the Company
is the registered owner by assignment of the Vintage(TM) mark for seltzer water.
The Company does not own and is not licensed to market soft drink products in
the United States under the Cott(TM) trademark or brand name, which is owned in
the United States by an unrelated party. Formulations owned by the Company, and
the Company's customers or suppliers, constitute valuable trade secrets.
SEASONALITY OF SALES
Sales of beverages are seasonal, with the highest sales volumes generally
occurring in the second and third fiscal quarters (corresponding to the warmer
months of the year). Accordingly, the Company's sales volume can be affected by
weather conditions in its core markets. The Company believes that it has access
to adequate production capacity to meet seasonal sales demands.
CUSTOMERS
The Company's customers include many of the largest national and regional
grocery, mass-merchandise and drugstore chains, wholesale and convenience store
chains, in its core markets of the United States, Canada and the United Kingdom.
During 2000, sales to Wal-Mart Stores, Inc. ("Wal-Mart") and Safeway, Inc.,
accounted for approximately 50%, in the aggregate, of the Company's total
consolidated sales. The Company considers its commercial relationships with
these customers, which have both been ongoing for more than eight years, to be
satisfactory. The loss of any significant customer, particularly Wal-Mart, upon
whose business the Company is substantially dependent, or customers which in the
aggregate represent a significant portion of its sales, could have a material
adverse effect on the Company's operating results and cash flows.
COMPETITION
The markets for the Company's products are extremely competitive. The
companies that produce and sell the major national brand beverages located in
the Company's core geographies possess significantly greater financial and
marketing resources than the Company has. Private label beverages sold by the
Company's customers compete for access to shelf space with branded beverage
products on the basis of quality and price. Even though such shelf space is
primarily controlled by the Company's customers, there is no guarantee that they
will allocate space to their own private label products. In addition, should any
of the national brand companies enter the private label segment of the beverage
market, the Company's operating results and cash flow could also be materially
adversely affected. The Company also competes with other non-alcoholic beverage
manufacturers.
The Company faces competition from other private label beverage
manufacturers in the United States and the United Kingdom, some of which possess
substantial bottling facilities. The Company differentiates itself from other
private label beverage suppliers by offering its customers superior service,
efficient distribution methods, manufacturing innovation, premium quality
products, category management and strategies for packaging and marketing.
Quality and consistency of taste are ensured by access to premium quality cola
and other concentrates, primarily through the RC Agreement.
8
9
RESEARCH AND DEVELOPMENT
The Company maintains a research facility in Columbus, Georgia where new
beverages are developed and customized for customers. The Company believes that
the provision of these services and the expansion of our product lines are key
to innovation, and are an important part of our business strategy. During 2000,
the Company spent approximately $1.5 million on product research and development
and $3.4 million in the aggregate in 1999 and 1998.
GOVERNMENTAL CONTROLS AND ENVIRONMENTAL MATTERS
In producing and distributing the beverages in its core markets, the
Company must comply with various laws and regulations, including in the United
States those of the Food, Drug and Cosmetic Act, that address a variety of
issues such as food quality, environmental protection, transportation,
labelling, distribution standards, occupational health and safety and
advertising in each of its core markets.
Specifically, the Ontario Environmental Protection Act (the "Ontario Act")
provides that a minimum percentage of a bottler's soft drink sales within
specified areas in Ontario must be made in refillable containers. In order to
comply with these requirements, the Company, like other industry participants,
would have to significantly increase its sales in refillable containers. While
attempts to improve sales in refillable containers is being undertaken, the
requirements of the Ontario Act are not being met by the Company or other
industry participants. These provincial restrictions are currently not being
enforced by the Ontario government. If enforced, the requirements of the Ontario
Act relating to sales in refillable containers could result in reduced margins
in the 750 ml refillable glass package as well as potential fines for
non-compliance and the possible prohibition of sales of soft drinks in
non-refillable containers in Ontario. Although the Company continues to work
with industry groups to review possible alternatives to propose to the
government in connection with requirements relating to sales in refillable
containers, the success of such efforts cannot be predicted, and such
requirements are ultimately beyond industry control.
The Company is also subject to environmental legislation in other
jurisdictions in which the Company carries on business including, in the United
States, the Occupational Safety and Health Act, the Unfair Labor Standards Act,
the Clean Air Act, the Clean Water Act and laws relating to the maintenance of
fuel storage tanks. The Company's beverage manufacturing operations do not use
or generate a significant amount of toxic or hazardous substances. The Company
has not been notified of any enforcement actions against the Company under
environmental legislation, and is not aware of any environmental contamination
at any of its properties, which could result in material clean-up costs.
Management believes that the Company's current practices and procedures for the
control and disposition of such wastes comply in all material respects with
applicable laws, and with the exception of the Ontario Act, that it is in
compliance in all material respects with the existing legislation in the
Company's core markets.
EMPLOYEES
As of December 30, 2000, the Company had approximately 2,160 employees, of
whom an estimated 1,060 are located in the United States, 680 are located in
Canada and 420 are located in the United Kingdom and elsewhere. The Company,
through its divisions and subsidiaries, has entered into numerous collective
bargaining agreements that management believes contain terms that are typical in
the beverage industry. Management currently believes that as these agreements
expire they will be renegotiated on terms satisfactory to the Company. The
Company considers its relations with employees to be good.
ITEM 2. PROPERTIES
The Company operates seven beverage production facilities in the United
States, five of which are owned and two of which are leased. The Company
operates six beverage production facilities in Canada; four of which are owned
and two of which are leased by the Company. In the United Kingdom, the Company
owns and operates two beverage production facilities. Total square footage of
the production facilities operated by the Company is approximately 1,175,075 in
the United States; 934,317 in Canada; and 416,000 in the United Kingdom. The
total mortgages for the Company's production facilities is US$2.5 million. Lease
terms for those
9
10
beverage production facilities that are leased expire between the years of 2002
and 2007. The Company believes that its facilities and production equipment,
together with third-party manufacturing arrangements, provides it with
sufficient capacity to meet current intended purposes, and that it will be
sufficient to supply foreseeable demand from customers, even in peak months. In
addition, opportunities exist to accommodate increased demand through additional
production in the current facilities by increasing personnel and the number of
shifts.
ITEM 3. LEGAL PROCEEDINGS
Destination Products International, Inc. ("DPI") (now Interim BCB, LLC and
wholly-owned by the Company), and the Company are named as defendants in an
action by Channelmark Corporation ("Channelmark"), commenced on or about October
16, 1997 in the United States District Court, Minnesota. Channelmark alleges
that DPI breached a contract regarding the processing and marketing of chicken
by-products and miscuts, fraudulently induced Channelmark to enter into the
contract, tortious interference with prospective advantage, unfair competition,
and related claims. In its complaint, Channelmark sought unspecified damages in
excess of $75,000. In its Initial Disclosure, filed in accordance with Federal
Rule of Civil Procedure 26, Channelmark claimed initial unspecified damages of
$3,500,000, which was subsequently increased to $38,216,552, and subsequently
decreased to $6,263,569. DPI has denied Channelmark's allegations, and has
asserted a counterclaim against Channelmark and its principals alleging breach
of contract, fraud, and breach of fiduciary duty, claiming damages of
$3,000,000. DPI and the Company served a summary judgment motion seeking
dismissal of Channelmark's Complaint. Channelmark and its principals served a
summary judgment motion seeking dismissal of DPI's Counterclaim. These motions
were heard by the Court on June 18, 1999, and a decision was rendered on March
21, 2000. In its Order, the Court dismissed all of Channelmark's fraud claims,
(except one), and its unfair competition claim. The Court also dismissed DPI's
counterclaim alleging fraud and breach of fiduciary duty. The trial took place
in March, 2001. No decision has as yet been rendered by the Court. The Company
believes that it has valid defenses to the remaining claims made by the
plaintiff and that, in any event, any damages likely to be awarded to the
plaintiff are not expected to be material, and will be offset by the amounts
claimed by the DEFENDANTS on the counterclaim.
In August 1999, the Company was named as a defendant in an action styled
North American Container, Inc. v. Plastipak Packaging Inc., et al., filed in the
United States District Court for the Northern District of Texas, Dallas
Division. The plaintiff, North American Container, Inc., has sued over forty
defendants, alleging, among other things, that Cott USA Corporation has
infringed a U.S. patent relating to plastic containers. The Court has granted
the motion filed by North American Container, Inc. to substitute BCB USA Corp.
for Cott USA Corporation as a defendant. The Complaint subsequently was amended
to include a Reissue Patent based on the original patent in suit. The plaintiff
alleges that the infringement is willful, and seeks injunctive relief, treble
damages and recovery of attorneys' fees and costs. The Company has reached an
agreement with its major supplier of PET bottles in the United States to
indemnify the Company for a significant portion of its costs and damages, if
any. This portion is based upon such supplier's pro rata share of those PET
bottles supplied to the Company which were sold by the Company in the United
States during the period in issue in the litigation (which share is currently
estimated to be 85%). The case is in the early stages, and discovery has not yet
begun. The Company is not in a position to state the anticipated outcome of this
case at this time, however, IT believes that any damages likely to be awarded to
the plaintiff will not be material.
On April 14, 2000, the Lemelson Medical, Education & Research Foundation,
Limited Partnership (the "Foundation") filed a patent infringement civil action
in the United States District Court for the District of Arizona against the
Company and 106 other defendants, which are alleged to manufacture and sell
products for human consumption or use. The suit alleges that these defendants
have infringed on "machine vision" and "automatic identification" patents in
their manufacturing processes and automated management of inventory,
warehousing, distribution and point of sale transactions. The Foundation seeks
an injunction against further alleged infringement and an award of damages
"adequate to compensate" the Foundation for past infringements, treble damages
based on allegation of willful and deliberate infringement and reasonable
attorney's fees. On January 2, 2001, the Court stayed the action pending the
outcome of litigation in Nevada over the validity and ownership of the patents
at issue. Since the lawsuit is in its very early stages, the Company is not in a
position to state the outcome of this case at this time, as the Company is still
investigating the allegations and evaluating the
10
11
claim and potential defenses given the uncertainty over the validity of the
patents. HOWEVER, THE COMPANY believes that any damages likely to be awarded to
the plaintiff will not be material.
The action brought by 957508 Ontario Ltd., Bevpac Beverages Ltd., Frank
Pirillo, Sam Olivito, 916939 Ontario Ltd. and Management International Trading
Company Limited against the Company and certain of its predecessors has been
settled subsequent to 2000, for an amount that is not material to the Company.
The Company is engaged in various litigation matters in the ordinary course
of its business, none of which, individually or in the aggregate, the Company
considers to have a material adverse effect on the financial condition of the
Company and its subsidiaries taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of our shareowners during the fourth
quarter of 2000.
11
12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREOWNER
MATTERS
The Company's common shares are listed on The Toronto Stock Exchange (the
"TSE") under the ticker symbol BCB; and on NASDAQ under the ticker symbol
"COTT".
The tables below sets forth for the periods indicated the high and low
reported sales prices per common share since January 1, 1999.
THE TSE (CDN. $)
2000 1999
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
First quarter..................................... 10.25 7.25 6.20 3.00
Second quarter.................................... 9.50 6.60 7.35 3.60
Third quarter..................................... 9.20 7.30 6.45 4.70
Fourth quarter.................................... 12.15 8.50 9.00 5.85
NASDAQ (US$)
2000 1999
-------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
First quarter..................................... 7.00 5.00 4.13 1.97
Second quarter.................................... 7.25 4.38 4.94 2.38
Third quarter..................................... 6.06 4.88 4.94 3.16
Fourth quarter.................................... 7.88 5.53 6.25 3.97
The number of shareowners of record for Common Shares as of March 12, 2001
was 1,050. This number was determined from records maintained by the Company's
transfer agent and does not include beneficial owners of the Company's
securities whose securities are held in the names of various dealers or clearing
agencies. The closing sale price of the Common Shares on March 12, 2001 was
(Cdn) $14.77 for the TSE and $9.44 for NASDAQ.
The Company has not paid any cash dividends with respect to Common Shares
since June 1998 and it is unlikely the Company will do so in 2001. See note 17
to the consolidated financial statements for restrictions on dividend payments,
on pages 36 and 37 of the Company's 2000 Annual Report to Shareowners,
incorporated herein by reference.
CALCULATION OF AGGREGATE MARKET VALUE OF NONAFFILIATE SHARES
For purposes of calculating the aggregate market value of those Common
Shares of the Company held by non-affiliates, as shown on the cover page of this
Report, it has been assumed that all of the outstanding shares were held by
non-affiliates except for shares held by directors (other than Frank E. Weise
III, who is also an officer), THL, Legg Mason Inc. and Nancy Pencer, Stephen
Halperin and Fraser Latta as trustees of the Nancy Pencer Spouse Trust
(collectively, the "Excluded Parties"). However, this should not be deemed to
constitute an admission that all of the Excluded Parties are, in fact,
affiliates of the Company, or that there are not other persons who may be deemed
to be affiliates of the Company. In the Form 10-K filed for the Company's fiscal
year ended January 1, 2000, the aggregate market value of the Common Shares held
by non-affiliates was calculated BASED ON THE ASSUMPTION THAT all outstanding
Common Shares WERE HELD BY NON-AFFILIATES (including all shares held by the
Excluded Parties). Further information concerning shareholdings of officers,
12
13
directors and principal stockholders is included in Item 12: Security Ownership
of Certain Beneficial Owners and Management.
RECENT SALES OF UNREGISTERED SECURITIES
There were no sales of unregistered securities during the period covered by
this Report.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" for the periods 1996 through 2000, on page 47 of
the Company's 2000 Annual Report to Shareowners, is incorporated herein by
reference.
Consolidated financial statements in accordance with Canadian GAAP are made
available to all shareowners and filed with Canadian regulatory authorities.
Under Canadian GAAP, the Company reported a net income of $24.4 million in 2000,
$20.2 million in 1999 and a net loss of $102.0 million in 1998 compared to the
Company reporting a net income under US GAPP of $25.4 million in 2000, $18.5
million in 1999, and a net loss of $109.5 million in 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results
from Operations" on pages 13 to 21 of the Company's 2000 Annual Report to
Shareowners, is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Quantitative and Qualitative Disclosures About Market Risk" on pages 19
and 20 of the Company's 2000 Annual Report to Shareowners, is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company, included in
the Company's 2000 Annual Report to Shareowners, are incorporated herein by
reference at the pages indicated:
1. Report of Independent Accountants (page 22)
2. Consolidated Statements of Income -- Periods ended December 30, 2000,
January 1, 2000 and January 2, 1999 (page 23)
3. Consolidated Balance Sheets -- As of December 30, 2000 and January 1,
2000 (page 24)
4. Consolidated Statements of Shareowners' Equity -- Periods ended
December 30, 2000, January 1, 2000, and January 2, 1999 (page 25)
5. Consolidated Statements of Cash Flows -- Periods ended December 30,
2000, January 1, 2000 and January 2, 1999 (page 26)
6. Notes to the Consolidated Financial Statements (pages 27 - 45)
7. Quarterly Financial Information (Unaudited) (page 46)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
None.
13
14
PART III
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of names and ages of all of the Company's executive
officers as of March 6, 2001, indicating all positions and offices with the
Company held by each such person.
PERIOD SERVED
NAME AND MUNICIPALITY OF RESIDENCE OFFICE PRINCIPAL OCCUPATION AGE AS OFFICER
- ---------------------------------- ------ -------------------- --- -------------
Frank E. Weise III................ President, Chief Officer of the Company 56 1998 to present
Vero Beach, Florida Executive Officer and
Director
Mark Benadiba..................... Executive Vice-President Officer of the Company 47 1990 to present
Toronto, Ontario and President, Cott
Beverages Canada
David G. Bluestein................ Executive Vice-President Officer of the Company 55 1998 to present
Ridgefield, Connecticut and President, Cott
Beverages USA
Paul R. Richardson................ Executive Officer of the Company 44 1994 to present
Sarasota, Florida Vice-President, Global
Procurement and
Innovation
Raymond P. Silcock................ Executive Vice-President Officer of the Company 50 1998 to present
Philadelphia, Pennsylvania and Chief Financial
Officer
Neil A. Thompson.................. Executive Vice-President Officer of the Company 45 1999 to present
Little Aston, Sutton Coldfield, and Managing Director,
United Kingdom Cott United Kingdom &
Europe
Mark R. Halperin.................. Senior Vice-President, Officer of the Company 43 1995 to present
Toronto, Ontario General Counsel and
Secretary
Colin D. Walker................... Senior Vice-President, Officer of the Company 43 1998 to present
London, Ontario Human Resources
Tina Dell'Aquila.................. Vice-President, Officer of the Company 38 1998 to present
Toronto, Ontario Controller
Catherine M. Brennan.............. Vice-President, Officer of the Company 43 1999 to present
Toronto, Ontario Treasurer
Ivano R. Grimaldi................. Vice-President, Officer of the Company 43 2000 to present
Laval, Quebec Purchasing
Edmund P. O'Keeffe................ Vice-President, Investor Officer of the Company 37 1999 to present
Toronto, Ontario Relations and Corporate
Development
Prem Virmani...................... Vice-President, Officer of the Company 54 1991 to present
Columbus, Georgia Technical Services
During the last five years, the above persons have been engaged in their
principal occupations or in other executive capacities with the Company except
as follows: prior to April 1998, Frank E. Weise III was Chairman
14
15
of Confab Inc. (manufacturer of retailer branded feminine hygiene and
incontinence products) and prior to January 1997, was Senior Vice President of
Campbell Soup Company (national brand food products manufacturer), and President
- -- Bakery and Confectionery Division, of Campbell Soup Company; prior to
September 1998, David G. Bluestein was President of IFF Flavors (flavors and
fragrances), and prior to 1998 was President, Duracell International, North
America; Paul R. Richardson has held several senior management positions since
joining Cott in 1994; prior to September 1998, Raymond P. Silcock was Chief
Financial Officer of Delimex Holding Inc. (a holding company) and prior to 1997
was Vice-President Finance -- Bakery and Confectionery Division of Campbell Soup
Company; prior to February 1999, Neil A. Thompson was a Managing Director of
Spillers Petfoods (pet food manufacturer); prior to September 1998, Mark R.
Halperin held the position of Vice President, General Counsel and Secretary and
is the brother of Stephen H. Halperin, a Director of the Company; prior to
September 1998, Colin D. Walker was Senior Manager, Deloitte & Touche Consulting
(consulting company) and prior to September 1997 was Vice-President, Human
Resources of Imasco (consumer products and services); prior to February 1999,
Catherine M. Brennan was a Treasurer and Senior Director, Taxation of Nabisco
Ltd. (food and beverage company); prior to October 1997, Tina Dell'Aquila was
Director, Corporate Accounting of Dominion Textile Inc. (textile company); and
Edmund O'Keeffe has held several senior management positions in Marketing since
joining the Company in October 1994.
DIRECTORS OF THE COMPANY
For information with respect to the directors of the Company, see the
"Election of Directors" section of the Proxy Circular for the 2001 Annual and
Special Meeting of Shareowners, which is incorporated herein by reference.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For information with respect to Section 16(a) of the Securities Exchange
Act of 1934, reports for directors and executive officers of the Company, see
the "Section 16 (a) Beneficial Ownership Reporting Compliance" section of the
Proxy Circular for the 2001 Annual and Special Meeting of Shareowners, which is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
For information with respect to executive compensation, see the "Executive
Compensation" section of the Proxy Circular for the 2001 Annual and Special
Meeting of Shareowners, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
For information with respect to security ownership of certain beneficial
owners and management, see the "Voting Shares and Principal Owners Thereof", and
the "Directors Table" and sections of the Proxy Circular for the 2001 Annual and
Special Meeting of Shareowners, which are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information with respect to certain relationships and related
transactions, see the "Certain Relationships and Related Transactions" section
of the Proxy Circular for the 2001 Annual and Special Meeting of Shareowners,
which is incorporated herein by reference.
15
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT AND REPORTS ON FORM 8-K
1. FINANCIAL STATEMENTS:
The Financial Statements filed as part of this Report are listed on the
Index to Financial Statements, which is included in the Company's Annual
Report, which is incorporated by reference herein. (See Item 8).
2. FINANCIAL STATEMENTS SCHEDULES:
Report of Independent Accountants
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.
3. EXHIBITS:
NUMBER DESCRIPTION
------ -----------
2.1+ Asset Purchase Agreement by and between Concord Beverage
Company and Concord Beverage LP, dated as of October 18,
2000 (which is incorporated by reference to Exhibit 2.1 to
the Company's Form 8-K dated as of October 18, 2000).
2.2+ Agreement of Sale by and between Concord Beverage Company
and Concord Beverage LP, dated as of October 18, 2000 (which
is incorporated by reference to Exhibit 2.2 to the Company's
Form 8-K dated as of October 18, 2000).
2.3 Acquisition Agreement, dated November 20, 1997, among Cott
UK Limited, Cott Corporation and the several persons listed
in Schedule 1 to the Agreement relating to the acquisition
of Hero Drinks Group (U.K.) Limited (which is incorporated
by reference to Exhibit 10.2 to the Company's Form 10-K
dated March 31, 2000).
2.4 (*)Asset Acquisition and Facility Use Agreement, dated April
13, 2000, between BCB USA Corp. and Schmalbach-Lubeca
Plastic Containers USA, Inc. relating to the sale of the PET
perform blow molding operation (which is incorporated by
reference to Exhibit 10.1 to the Company's Form 10-Q dated
May 16, 2000).
3.1 Articles of Incorporation of the Company (which is
incorporated by reference to Exhibit 3.1 to the Company's
Form 10-K dated March 31, 2000).
3.2 By-laws of Company (which is incorporated by reference to
Exhibit 3.2 to the Company's Form 10-K dated March 31,
2000).
4.1 Credit Agreement dated as of August 19, 1999, among the
Company, First Union (as Administrative Agent), National
Bank of Canada (as Canadian Agent) and other financial
institutions (as lenders) named therein (which is
incorporated by reference to Exhibit 4.1 to the Company's
Form 10-K dated March 31, 2000).
4.2 Subscription Agreement dated as of June 12, 1998 for
Convertible Participating Voting Second Preferred Shares,
Series 1 of the Company (as issuer) (which is incorporated
by reference to Exhibit 4.2 to the Company's Form 10-K dated
March 31, 2000).
4.3 Letter Agreement dated as of November 3, 1999, regarding
standstill provisions between the Company and the Thomas H.
Lee Company (which is incorporated by reference to Exhibit
4.3 to the Company's Form 10-K dated March 31, 2000).
4.4 Indenture dated as of June 25, 1995, between the Company (as
issuer) and The Bank of New York (as trustee) (which is
incorporated by reference to Exhibit 7.1 to the Company's
Form F-10, dated June 23, 1995 (File No. 33-93064)).
16
17
NUMBER DESCRIPTION
------ -----------
4.5 Indenture dated as of June 17, 1997, between the Company (as
issuer) and Marine Midland Bank (as trustee) (which is
incorporated by reference to Exhibit 7.1 to the Company's
Form F-10, dated June 10, 1997 (File No. 333-9644)).
10.1 (*)Termination Agreement, dated November 1, 1999, among Cott
Beverages USA, Inc. and Premium Beverages Packers, Inc,
(which is incorporated by reference to Exhibit 10.1 to the
Company's Form 10-K dated March 31, 2000).
10.2 (*)Supply Agreement, dated December 21, 1998, among Wal-Mart
Stores, Inc. and Cott Beverages USA, Inc. (which is
incorporated by reference to Exhibit 10.3 to the Company's
Form 10-K dated March 31, 2000).
10.3 (*)Concentrate Purchase Agreement dated as of January 28,
1994, among BCB International Limited (since assigned to
Cott Corporation), Cott Corporation and Royal Crown Cola Co.
(now Royal Crown Company Inc.) (which is incorporated by
reference to Exhibit 10.4 to the Company's Form 10-K dated
March 31, 2000).
10.4 (**)Employment Agreement of Frank E. Weise III dated June
11, 1998 (which is incorporated by reference to Exhibit 10.5
to the Company's Form 10-K dated March 31, 2000).
10.5 (**)Employment Agreement of David G. Bluestein dated August
28,1998 (which is incorporated by reference to Exhibit 10.6
to the Company's Form 10-K dated March 31, 2000).
10.6 (**)Employment Agreement of Mark Benadiba dated October 7,
1997, as amended December 19, 1997 (which are incorporated
by reference to Exhibit 10.7 to the Company's Form 10-K
dated March 31, 2000), and as further amended September 25,
2000 (filed herewith).
10.7 (**)Employment Agreement of Paul R. Richardson dated August
23, 1999 (which is incorporated by reference to Exhibit 10.8
to the Company's Form 10-K dated March 31, 2000).
10.8 (**)Employment Agreement of Raymond P. Silcock dated August
17, 1998 (which is incorporated by reference to Exhibit 10.9
to the Company's Form 10-K dated March 31, 2000).
10.9 (**)Amended 1999 Executive Incentive Share Compensation Plan
effective January 3, 1999 (filed herewith).
10.10 (**)2000 Executive Incentive Share Compensation Plan
effective January 2, 2001 (filed herewith).
10.11 (**)Second Canadian Employee Share Purchase Plan effective
January 2, 2001 (filed herewith).
13 The Company's Annual Report to Shareowners for the year
ended December 30, 2000 (filed herewith).
21 List of Subsidiaries of the Company (filed herewith).
23 Consent of Independent Accountants (filed herewith).
- ---------------
+ In accordance with Item 601(b)(2) of Regulation S-K, the exhibits to this
Exhibit have been omitted and a list briefly describing those exhibits is
contained in the Exhibit. The Registrant will furnish a copy of any omitted
exhibit to the Commission upon request.
(*) Document is subject to request for confidential treatment.
(**) Indicates a management contract or compensatory plan.
REPORTS OF FORM 8-K
On October 31, 2000, the Company filed a Current Report on Form 8-K dated
October 18, 2000 reporting under Item 2 the completion of the Company's
acquisition of the assets used in the private label beverage and Vintage(TM)
brand seltzer water businesses of the Concord Beverage Company.
On December 29, 2000, the Company filed an amendment to its Current Report
on Form 8-K dated October 18, 2000 to update financial information under Item 7
regarding its acquisition of the assets used in the private label beverage and
Vintage(TM) brand seltzer water businesses of the Concord Beverage Company.
17
18
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
COTT CORPORATION
Our audits of the consolidated financial statements referred to in our
report dated February 7, 2001 appearing in the 2000 Annual Report to Shareowners
of Cott Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 14(2) of this Form
10-K. In our opinion, these financial statement schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Toronto, Ontario
February 7, 2001
18
19
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 30, 2000
-------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTION PERIOD
- ----------- ------------ ---------- -------- --------- ----------
RESERVES DEDUCTED IN THE BALANCE SHEET
FROM THE ASSETS TO WHICH THEY APPLY
Allowances for losses on:
Accounts receivables..................... $ (8.7) $ (0.4) $ -- $ 5.8 $ (3.3)
Inventories.............................. (5.9) (2.9) -- 3.7 (5.1)
Property, plant and equipment............ -- (0.8) -- 0.8 --
Goodwill................................. (1.2) -- -- 1.2 --
Intangibles and other assets............. (1.1) (0.4) -- 0.4 (1.1)
Deferred income taxes.................... (9.3) (0.8) -- -- (10.1)
------ ------ ----- ------ ------
$(26.2) $ (5.3) $ -- $ 11.9 $(19.6)
====== ====== ===== ====== ======
YEAR ENDED JANUARY 1, 2000
-------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTION PERIOD
- ----------- ------------ ---------- -------- --------- ----------
RESERVES DEDUCTED IN THE BALANCE SHEET
FROM THE ASSETS TO WHICH THEY APPLY
Allowances for losses on:
Accounts receivables..................... $ (7.5) $ (2.7) $ -- $ 1.5 $ (8.7)
Inventories.............................. (13.3) 1.1 -- 6.3 (5.9)
Property, plant and equipment............ (3.5) 0.3 -- 3.2 --
Goodwill................................. -- (2.4) -- 1.2 (1.2)
Intangibles and other assets............. (0.5) (0.1) (1.0) 0.5 (1.1)
Deferred income taxes.................... (20.2) 10.9 -- -- (9.3)
------ ------ ----- ------ ------
$(45.0) $ 7.1 $(1.0) $ 12.7 (26.2)
====== ====== ===== ====== ======
PERIOD ENDED JANUARY 2, 1999
-------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTION PERIOD
- ----------- ------------ ---------- -------- --------- ----------
RESERVES DEDUCTED IN THE BALANCE SHEET
FROM THE ASSETS TO WHICH THEY APPLY
Allowances for losses on:
Accounts receivables..................... $ (8.6) $ (3.9) $ -- $ 5.0 $ (7.5)
Inventories.............................. (3.4) (16.3) -- 6.4 (13.3)
Property, plant and equipment............ -- (18.9) -- 15.4 (3.5)
Goodwill................................. -- (15.5) -- 15.5 --
Intangibles and other assets............. -- (2.2) -- 1.7 (0.5)
Deferred income taxes.................... (3.6) (16.6) -- -- (20.2)
------ ------ ----- ------ ------
$(15.6) $(73.4) $ -- $ 44.0 $(45.0)
====== ====== ===== ====== ======
Certain amounts have been reclassified to conform to current year
presentation.
19
20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
COTT CORPORATION
By: /s/ FRANK E. WEISE III
------------------------------------
FRANK E. WEISE III
Chief Executive Officer and a
Director
Date: March 7, 2001
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
/s/ FRANK E. WEISE III President, Chief Executive Officer Date: March 7, 2001
- ------------------------------------- and Director
FRANK E. WEISE III (Principal Executive Officer)
/s/ RAYMOND P. SILCOCK Chief Financial Officer Date: March 7, 2001
- ------------------------------------- (Principal Financial Officer)
RAYMOND P. SILCOCK
/s/ TINA DELL'AQUILA Vice President, Controller Date: March 7, 2001
- ------------------------------------- (Principal Accounting Officer)
TINA DELL'AQUILA
/s/ SERGE GOUIN Chairman of the Board of Directors Date: March 7, 2001
- ------------------------------------- and Director
SERGE GOUIN
/s/ COLIN J. ADAIR Director Date: March 7, 2001
- -------------------------------------
COLIN J. ADAIR
/s/ W. JOHN BENNETT Director Date: March 7, 2001
- -------------------------------------
W. JOHN BENNETT
/s/ C. HUNTER BOLL Director Date: March 7, 2001
- -------------------------------------
C. HUNTER BOLL
/s/ THOMAS M. HAGERTY Director Date: March 7, 2001
- -------------------------------------
THOMAS M. HAGERTY
/s/ STEPHEN H. HALPERIN Director Date: March 7, 2001
- -------------------------------------
STEPHEN H. HALPERIN
20
21
/s/ DAVID V. HARKINS Director Date: March 7, 2001
- -------------------------------------
DAVID V. HARKINS
/s/ TRUE H. KNOWLES Director Date: March 7, 2001
- -------------------------------------
TRUE H. KNOWLES
/s/ FRASER D. LATTA Director Date: March 7, 2001
- -------------------------------------
FRASER D. LATTA
/s/ DONALD G. WATT Director Date: March 7, 2001
- -------------------------------------
DONALD G. WATT
21